Mortgage rates eased but might head higher, and loan applications rose.
Down 0.03% from last week, the average 30-year fixed rate was 5.22% in Freddie Mac’s survey of 125 thrifts, credit unions, commercial banks and mortgage lenders for the week ending Aug. 6. The 30-year was 130 basis points lower than the same week in 2008.
Better-than-expected economic reports were credited for the improvement.
“The economy slowed by an annual rate of 1 percent in the second quarter, which was more positive than market forecasts,” Freddie Chief Economist Frank Nothaft said in the report.
Falling 6 BPS from a week earlier, the average 15-year fixed-rate mortgage was 4.63%, Freddie’s survey indicated.
The yield on the 10-year Treasury bond was 3.752% today, higher than the 3.67% it yielded a week ago. The increase suggests fixed rates are headed higher.
But 46 of the 100 panelists surveyed by Bankrate.com for the week Aug. 6 to Aug. 12 predicted rates will not move more than 2 BPS during the next 35 to 45 days. Just under a third expected an increase and less than one-quarter projected a decline.
Freddie reported the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.73%, 2 BPS better than last week.
The one-year Treasury-indexed ARM eased 2 BPS to 4.78% in Freddie’s survey, while the underlying one-year Treasury bill yield climbed to 0.49% yesterday from 0.50% one week earlier, according to U.S. Treasury data.
The six-month London Interbank Offered Rate was 0.91% yesterday, Bankrate.com reported. LIBOR was 0.94% seven days prior.
In reaction to an increase last week both in the one-year ARM and the five-year hybrid ARM, the share of loan applications that were adjustable-rate edged down to 5.4% from the prior week’s 5.5%, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ended July 31.
MBA reported that overall loan applications rose 4% from the prior week on a seasonally adjusted basis. Compared to a year earlier, 1003s were 18% better.
Refinance activity rose 7%, pushing the refinance share of applications to 54% from 53% in MBA’s previous survey. Purchase activity edged up 1%.
